Samsung SWOT Analysis

Prepared By : Maged Elsakka

Samsung History

• From its inception as a small export business in Taegu, Korea, Samsung has grown to become one of the world's leading electronics companies, specializing in digital appliances and media, semiconductors, memory, and system integration. Today Samsung's innovative and top quality products and processes are world recognized. This timeline captures the major milestones in Samsung's history, showing how the company expanded its product lines and reach, grew its revenue and market share, and has followed its mission of making life better for consumers around the world.

Samsung company profile

South Korean company, founded in 1938Largest chaebolTotal revenue € 185.1 bn (2012) Samsung Electronics largest SBU, revenu € 140.5 bn (2012) CEO is Dr. Oh-Hyun Kwon72 Countries206,000 employees

Samsung smart phones

First SE mobile phone in 1988Apple introduces smartphone in 2007SE smartphones unsuccesful at first3.7% market share at the end of 2009Google Android launched in 2010Samsung Galaxy S in June 2010Market leader in 2012, with 215 m units

Vision Statement Evaluation :

• Definition:“Vision is a statement that expresses organization’s ultimate objectives.”• Understanding the tool:It is very important for any organization to have clear and attainable long-term vision; the statement that guides every chief executive, manager or employee in achieving the same organizational objective. A vision statement asks ‘What does our business want to become?’ and usually is a one sentence, inspirational, clear and memorable statement that expresses company’s desired long-term position. It motivates employees to make extra effort and usually results in higher performance. Because money rewards only partly motivates employees, it is important to use other tools such as vision statement to increase their motivation.*The statement also indicates what resources, competencies and skills will be needed to achieve the future objective. This way it guides decision-making and resource allocation more effectively.

Mission statement of SamsungSamsung mission statement 2013

Samsung doesn’t have an official mission but express it through company’s philosophy:“At Samsung, we follow a simple business philosophy: to devote our talent and technology to creating superior products and services that contribute to a better global society.”

Mission statement of Samsung

Evaluation

Does it include…? Does it mention values like…?

Customers Products/Services Markets Citizenship Teamwork

No No Yes No No

Technology Concern forsurvival Philosophy Excellence Integrity

Yes No No No No

Self-concept Concern forpublic image Employees

Score 1.6/4.5No Yes No

Customer or product-oriented?

Customer-oriented

Difference between vision and mission statementsVision Mission

Purpose Tells what an organization aims to achieve. States what a company is currently doing.

Answers the question What do we want to become? What do we do?Includes •Objectives

•Values•Customers•Products/Services•Markets•Technology•Concern for survival•Philosophy•Self-Concept•Concern for public image•Concern for employees

Future or present time? Talks about the future Talks about the present

To whom it is developed? Employees of the company Employees, customers, suppliers, distributors, partners and communities

Which one is created first? Developed first Developed only when vision is available

How often does it change? Rarely changes because most of objectives takes years to achieve

Product-oriented missions change every time when a company decides to venture into new product market.

Overview

• Samsung’s statement is clearly too short and doesn’t provide enough information about what the company does or why it does it. The statement was evaluated 1.6 points because it only includes three essential components out of nine and has a customer-oriented philosophy. Customer-oriented statement defines organization’s purpose in terms of meeting customer needs rather than focusing on what products to produce and services to serve. Samsung also doesn’t mention in their philosophy any of the values we use in our evaluation but the company provides them separately:

• People• Excellence• Change• Integrity• Co-prosperity• These values show what guides Samsung’s actions and decisions. The company mentions excellence,

integrity and co-prosperity (or citizenship) as their values, which should have been included in their mission as well. In overall, Samsung’s philosophy does a poor job in revealing its core purpose to company’s stakeholders.

PEST& PESTEL Analysis

PEST analysis Political Economic

•Government stability and likely changes•Bureaucracy•Corruption level•Tax policy (rates and incentives)•Freedom of press•Regulation/de-regulation•Trade control•Import restrictions (quality and quantity)•Tariffs•Competition regulation•Government involvement in trade unions and agreements•Environmental Law•Education Law•Anti-trust law•Discrimination law•Copyright, patents / Intellectual property law•Consumer protection and e-commerce•Employment law•Health and safety law•Data protection law•Laws regulating environment pollution

•Growth rates•Inflation rate•Interest rates•Exchange rates•Unemployment trends•Labor costs•Stage of business cycle•Credit availability•Trade flows and patterns•Level of consumers’ disposable income•Monetary policies•Fiscal policies•Price fluctuations•Stock market trends•Weather•Climate change

Socio-cultural Technological

•Health consciousness•Education level•Attitudes toward imported goods and services•Attitudes toward work, leisure, career and retirement•Attitudes toward product quality and customer service•Attitudes toward saving and investing•Emphasis on safety•Lifestyles•Buying habits•Religion and beliefs•Attitudes toward “green” or ecological products•Attitudes toward and support for renewable energy•Population growth rate•Immigration and emigration rates•Age distribution and life expectancy rates•Sex distribution•Average disposable income level•Social classes•Family size and structure•Minorities

•Basic infrastructure level•Rate of technological change•Spending on research & development•Technology incentives•Legislation regarding technology•Technology level in your industry•Communication infrastructure•Access to newest technology•Internet infrastructure and penetration

Ethical Demographic

•Ethical advertising and sales practices•Accepted accounting, management and marketing standards•Attitude towards counterfeiting and breaking patents•Ethical recruiting practices and employment standards (not using children to produce goods)

•Population growth rate•Immigration and emigration rates•Age distribution and life expectancy rates•Sex distribution•Average disposable income level•Social classes•Family size and structure•Minorities

Environmental (ecological) Legal

•Weather•Climate change•Laws regulating environment pollution•Air and water pollution•Recycling•Waste management•Attitudes toward “green” or ecological products•Endangered species•Attitudes toward and support for renewable energy

•Anti-trust law•Discrimination law•Copyright, patents / Intellectual property law•Consumer protection and e-commerce•Employment law•Health and safety law•Data Protection

Porters five forces analysisThreat of new entrantsHigh, mainy Chinese competitors

Threat of substitutesHigh, many similar products on the market

Customer powerHigh, low threshold for switching

Supplier powerLow, Samsung market leader

Competitive rivalryHigh, fierce competion with Apple, Sony, SK Hynix, etc.

Complementors (sixth force)Open Handset Alliance (OHA): Android OS

Apple, market creator, large customer

Benchmarks: Samsung Galaxy Note II vs Apple iPhone 5

Competitive Profile Matrix (CPM)

Android OS iOS Windows Phone

Critical Success Factors Weight Rating Score Rating Score Rating ScoreMarket share 0.13 4 0.52 2 0.26 2 0.26Number of apps in store 0.10 4 0.40 4 0.40 2 0.20

Frequency of updates 0.06 3 0.18 4 0.24 2 0.12

Design 0.07 3 0.21 3 0.21 3 0.21Product brand reputation 0.05 3 0.15 3 0.15 2 0.10

Distribution channels 0.11 4 0.44 2 0.22 3 0.33

Usability 0.11 3 0.33 3 0.33 3 0.33

Customization features 0.04 4 0.16 2 0.08 2 0.08

Marketing capabilities 0.04 2 0.08 4 0.16 2 0.08

Company brand reputation 0.10 4 0.40 4 0.40 3 0.30

Openness 0.02 4 0.08 2 0.04 2 0.04Cloud integration 0.12 4 0.48 2 0.24 2 0.24

Rate of OS crashes 0.08 1 0.08 4 0.32 3 0.24Total 1.00 - 3.51 - 3.05 - 2.53

BCG growth-share matrix

SWOT Analysis :

SWOT Analysis :

SWOT Analysis :

SWOT Analysis :

SWOT Analysis :

SWOT Analysis :

Market analysisKey Issues:

Samsung performs as flanker, not as leader

Looses market share in emerging smartphone markets to cheaper brands (China -6% 2011-2012)

Needs to develop further software of its own, vulnerable to Google’s power

Market Overview

Strategy recommendationsSamsung must position itself as market leader and resume its current strategy concerning product innovation and market divided segments in Western Market (including their power in the supply of smartphone components and marketing to revenue ratio), because

Samsung must research and develop its own software platform, because

Samsung must attack and enter the growing segment of cheaper smartphones and especially conquer China and be heavily invested in India (long term growth), because both countries will enlarge the smartphone market as a whole and have the need for a cheaper smartphone

Social Responsibility:

 Broad differentiation Strategy of SAMSUNG

Samsung Twos

Tows Matrix for Apple Inc. Strengths / internal

Strong brand image provides an edge over competitors. Net sales of iPhone increased 93% to $25.2 billion. Sales of music and other related products increased 23% compared to 2009

Robust financial performance strengthens investors’ confidence and provides capital for future growth avenues. The stock price in the year 2011 alone rose from 200’s to upper 400’s.

Lack of debt results in higher R&D budget driving innovation and new product ideas

Apple Inc. was a leader in gross profit margin and operating margin in 2011.

Weaknesses / internal

Patent infringement lawsuit may affect financial condition and operating results

Product recalls may harm Apple’s reputation and add significant warranty and other expenses.Product recalls were raised of the iPhone 4 due to antenna problems

In the suit between Nokia with the International Trade Commission about infringed patents of the mobile phones, portable music players and computers, customers received a free case that will mitigate the reception problems. This added additional expenses to the company’s bottom line.

Opportunities / external

Strong growth in smartphone and tablet markets to boost Apple’s revenues. iPhone handset unit sales increased by 32.3 million units or 81%

Robust outlook for mobile advertising market provides growth opportunity

Strong growth in a global smartphone industry

S/O

Increase IPhone and related product sales through online advertisement. Overall net sales increased by 66% from 2010

Apple’s brand recognition throughout all its markets can strengthen by the offering less expensive version of each product to appeal to lower income market

The company did not pay dividends because it reinvests the capital in the operation of the business

W/O

Global expansion through Mexico, Portugal, France and Australia

Robust outlook for mobile advertising market provides growth opportunity

Creating departament responsible for recalls and product warranties to maximize customers satisfaction

Samsung Twos

Threats / external

Rising popularity of Google Android may affect its market share

Strong foreign market presence of Hewlett Packard

Intense competition may affect the revenues and profitability. Decrease in iPod net sales of $821 by 10% and iPod unit sales by 15%

Dependence on specific suppliers may affect its operations and production

Product substitution and availability of Samsung tablets

Global economic conditions could materially adversely affect the Company

S/T

Purchase voice and data network to complement the smartphone division will help acquire stronger market position

Robust financial performance strengthens investors’ confidence and provides capital for future growth avenues, such as opening stores and expanding e-commerce throughout the global market.

Focused R&D driving innovation and consolidating its market position. Apple’s R&D expenditure was $1,782 mil in 2010, an increase of 33% from 2009. This provides the company with new technological innovations which can be used in Apple products.

Form a partnership with Google to supplement the Apple products.

W/T

Long term agreements between Apple Inc. and the suppliers to guarantee production commitments

Constant promotion of the brand will create stronger awareness and demand for products

Participation in local communities and charities to create positive image which was shadowed by lawsuits

Continue investment in technology in order to stay ahead of competitors and become a market leader

Samsung Twos